Tuesday, August 7, 2012

Short CRMB

I had a long post about the idea of shorting Crumbs Bake Shop, but was hesitate to go short because I felt just any good news would push up the stock. Well, the good news has arrived -- Starbucks will now sell their coffee at Crumbs Bake Shop.

Is having Starbucks coffee all the sudden going to fix their problems? Nope.  In fact, I think it's far less likely Starbucks will buy them out now. (Which was one of my big worries about shorting Crumbs) Starbucks can now sell their coffee through them without having to buyout their stores. Why buy the cow when you get the milk for free? A press release like the one Crumbs sent out, reminds me of crappy companies sending out press releases whenever they have a business relationship with a major company. You'd think it might be a big deal to their customers, but they haven't twitted about it yet (I'm sure they will, they tweet about everything.) It's not that big of a deal, but the market will appreciate it.

What is a big deal for Crumbs is, every quarter Crumbs loses around  $2M -- and they only have $4M left.

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